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Call rates edge higher on good demand from borrowing banks

04 Mar 2015 Evaluate

Interbank call rates were trading higher at 7.20/7.25% from its Tuesday’s close 7.35/7.40%, on account of good demand from borrowing banks even in second week of reporting cycle amidst tight liquidity in the banking system. The rates are expected to ebb from here on since most of the banks would have fulfilled their mandated requirement in order to avoid the volatility call rates going further.

The rates are also expected to ease in order to re-align with repo rates. In a surprise move and prompt reaction to the Budget 2015-16, the Reserve Bank of India (RBI) has cut repo rate by 25 basis points or 0.25 percent to 7.5%. 

The banks via Liquidity Adjustment Facility (LAF) borrowed Rs 2247 crore through repo auction on March 4, 2015, while banks via LAF facility borrowed Rs 3507 crore through repo window and parked Rs 6368 crore through reverse repo auction on March 03, 2015.

The overnight borrowing rates touched a high and low of 7.70% and 7.00% respectively.

According to the Clearing Corporation of India (CCIL), the weighted average rate (WAR) in the call money market was at 7.53% on Wednesday and total volume stood at Rs 2358974 crore, so far.

As per CCIL data, WAR in the CBLO (Collateralized Borrowing and Lending Obligation) market was at 7.18% in Wednesday and total volume stood at Rs 5011405 crore, so far. 

The indicative call rates which closed at 7.35/40% on Tuesday were contributions made from Andhra Bank, AXIS Bank, Bank of America, Bank of Baroda, Bank of India, Canara Bank, J P Morgan Chase, Citibank N.A., Corporation Bank, Credit Agricole Bank, Indusind Bank, ICICI Bank, ICICI Securities, IDBI Bank, Jammu and Kashmir Bank, Punjab National Bank, RBS, Societe Generale, Standard Chartered, so far.

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